CyberOptics Corporation

CYBE Details

CyberOptics Corporation (NASDAQ: CYBE) is a manufacturer and developer of high-precision 3D and 2D sensors for inspection and metrological activities. The company also produces a family of wireless, wafer-shaped sensors which provides critical factors in the fabrication of semiconductor processes. The company’s products are used in Surface Mount Technology (SMT) and semiconductor industries. The company operates in several geographies including U.S., Netherlands, China, Singapore, South Korea, Japan, and other Asian countries. As of April 27^th, 2021, the company’s market capitalization stood at USD 218.98 million.

New order for SQ3000™ Multi-Function systems: As of April 27, 2021, the company declared that it has received a new order, which is valued at approximately USD 2.4 million, for its SQ3000™ Multi-Function systems for mini-LED inspection and metrology. These systems are projected to be sent out at regular intervals throughout 2021, starting from the second quarter ending June 30.

Received order for 3D MX3000™ Systems: As of April 12, 2021, the company announced that it has received a new order valued at USD 1.8 million for its MX3000 memory module inspection system. These final vision inspection (FVI) systems are projected to produce revenues in the second half of 2021.

1QFY21 Results: The company has reported a 7.93% rise in net revenue to USD 17.73 million in Q1FY21 (ending March 31, 2021) as compared to USD 16.42 million in Q1FY20 (ending March 31, 2020). The company’s net revenue has benefited from the improvement in the sales mix consisting of an increased share of high-margin WaferSense® semiconductor products during this quarter. The company reported a 71.42% increase in net income to USD 1.44 million in Q1FY21 as compared to USD 0.84 million in Q1FY20.

Key Risks: CYBE has 80% of its sales revenue coming from the export sales in 2020. Export sales are subjected to international operation risk. The global trade conflicts and trade wars could have a negative impact on the company’s sales. The imposition of new tariffs could result in an increase in cost structure, and hence could negatively impact the company’s profitability.

Outlook: The company is expecting sales to be in the range of USD 21 million to USD 23 million for the second quarter of 2021 (ending June 31, 2021). CYBE is expecting strong long-term growth for 3D MRS and WaferSense® semiconductor products.

Valuation Methodology: EV/Sales Multiple Based Relative Valuation

(Data Source: Refinitiv, Thomson Reuters, Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company’s FY21E trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

CYBE Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

Stock Recommendation: CYBE has surged 22.54% in the past one months and is currently trading at a middle point of the 52-week range of USD 20.81 to USD 43.48. The stock is currently trading above its 200 DMA level. We have valued the stock using the EV/Sales based relative valuation methodology and arrived at a target price of USD 33.23. On the technical chart, the next support level is at USD 27.29. Considering the significant rise in the stock price in the past one month, operating at lower EBITDA margins but with decent fundamental growth, we recommend a “Speculative Buy” rating on the stock at the closing price of USD 30.00, up by 1.08% as of 27^th April 2021.

• Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once estimated target price is reached or if the price closes below the support level.